When most of us consider estate planning, thoughts of drafting a Last Will and Testament come to mind. While wills are still widely utilized, there is another important document that is often used in conjunction with them: a revocable living trust.
Revocable living trusts are documents created in the name and during the lifetime of the person doing planning and funded by his or her assets. These assets are managed by the trustee and at the time of the creator’s death, this document directs how his or her assets will be distributed. Usually, the creator is named trustee and manages his or her own affairs. Another person is named successor trustee to serve in the event of the creator’s incapacity or death. These documents are flexible in that they can be changed during the creator’s lifetime and be drafted to suit a variety of needs and interests.
There are advantages to revocable living trusts that are not available when using a will alone. Using a trust avoids the expensive and time-consuming probate process. All assets in the trust pass automatically and privately to the designated heirs upon death. With the use of a successor trustee, if the creator becomes incapacitated, he or she has already designated someone to manage the assets in the trust. This avoids the need for a power of attorney and the court proceedings necessary to give someone this type of control. Trusts can also be set up specifically to make arrangements for dependents such as minor children or those with special needs. They allow the creator to have control over how the assets are distributed and used.
Once a revocable living trust is put in place, a will can be used as a catchall. This type of will, commonly called a pour over will, is often utilized to distribute any assets that were not added to the trust.